Transcripts For BLOOMBERG Bloomberg Markets Americas 2024071

Come whichrevious also been revised higher. There was some expedition that as prices come up because of the fact you can get cheap lending at the moment or cheap borrowing , you would expect that at some have, that would start to an impact on a month by month basis. Nevertheless, the market was looking for this month on month number two actually slow, and that hasnt happened, which is really interesting and the light of what we are starting to see in the employment market. We saw initial jobless claims out a little bit earlier on. Youre starting to see the negative data could begin from the employment side of the economy, starting to come in a little softer. Bloombergs mike mckee joining us now with the details of that. Michael at one point on the housing numbers, existing home sales or closings, so these contracts were signed a couple of months ago when things were a little better in the economy, and we got low mortgage rates, so the one thing the fed has been able to do is stimulate the housing market. Does it drop off know that we moved into the fall with more cases, because more people are losing their jobs . We did see an unexpected big rise in the initial jobless claims this past week. 742,000, which is a lot higher 711,000 that we recorded in the week prior. We are also seeing the total number of people on jobless benefits is still at a very high level over 20 million. Doesnt quite match up at the payrolls report, but it does show you there are a lot of people out of work. We also had the philly fed numbers out this morning, 26 point three, down from 32. 3. Still expanding, but at a slower pace. We are starting to see the impact on the economy of this rising covid outbreak. Alix you just talk to loretta mester. Michael feroli said this week that the fed will up its bond buying. Michael the interesting thing was she wasnt so firm on the idea of additional monetary policy. Shes adjusted that at this point, there isnt a whole lot more the fed can do, and she made a very strong case for doing more on the fiscal side, but she admits it doesnt look Like Congress is going to do that, and that sets us up for trouble ahead. Take a listen. Certainly some sectors that need that face to face kind of commerce are not doing well at all. Other sectors are back to their prepandemic levels, thinking autos, thinking housing. That disparity is troubling. We knew things were going to slow down after the bounceback in the third quarter. You are seeing that in the data now. Michael the problem is the fed doesnt really know how this is going to go because at this point, we dont know whether we will get any kind of fiscal aid either now or when president elect biden takes office, so they are a bit flying blind. Alix and also the pandemic and employment insurance will wear out at the end of the year. Michael mckee, thank you very much. Tune in later today with dallas fed president Robert Kaplan on balance of power at 12 30 new york. Joining us now is kristen , Citi Private Bank head of capital markets. How do you measure the shortterm economic weakness, the scars that central bankers are talking about with the vaccine optimism . En it is really difficult. We have to say, what will drive markets shortterm . We expect there is going to be some headline risk simply because look at all the headlines coming across, whether it is new York City Schools being closed, increase covid cases, the worry about fiscal stimulus. Then you have to look at longterm, and the market is a great job of this. The market can look out six months and say what are we anticipating six months out, and that is where you have the kind of counter to that. It is also getting that benefit that we have such positive news around vaccines, and it is not just the vaccine story because the abatement of the pandemic is not only dependent on a vaccine. It is also dependent upon treatments and more prolific getting and basically good news on all of those fronts. Isthe Market Action proceeding cautious shortterm, but very constructive going into 2021, and we are positioning our investors to take advantage of what we expect going into next year. Havent we already guy havent we already priced in a lot of good news . The market has been driven by a huge amount of liquid to being provided all around the world. Kristen we saw what happened with the first pfizer announcement of the vaccine, and one of the most violent rotations we have seen in history in terms of going from what we could call the covid defensive stocks into covid cyclicals. But this rotation has only just we are looking at the positioning within equity markets. The upside is there within some of these covid cyclical industries. Not just financials such as real estate. You still see a significant lag versus the covid defenses, and this is where the real opportunity is for upside looking into 2021. Theres plenty of broadbased exposure that has been really crushed within 2020, and no we expect that to be very constructive for the sectors. Alix where . At what point it was going to be value and european equities. Now it feels like the consensus is in emerging markets. Where you see that being priced and . , kind of building out this international theme, this is an area where, when you look at the part of the equity market that has benefited from this momentum, the tech, the ecommerce, growers have lagged behind the broadbased markets to the tune of about 8 this year, so these are companies that have really strong Balance Sheets that have been consistently growing their dividends, theyre poised well for all economic conditions. When you go back over the past three decades, these companies who have really prudent Balance Sheet management have outperformed in 24 out of the past 30 years. They have lagged because of this exhaustion us shocked and this focus on covid defenses, but that is an area that make a lot of sense only because of the disparity we are seeing with an equity markets, but also because where are you getting yields right now. They benefit a portfolio and both of those areas. Guy do you therefore avoid to bounceback trades more broadly . If you bring up sectors let the airlines, the airlines have come back really strongly because of what is happening with the vaccine news. Would you stay away from that space . These are companies that still have severely impaired Balance Sheets. They are likely to have to do equity raisings. We still dont know what the outlook is going to be for business travel. How selective do you have to be in terms of this bounceback, this rotation away from the big momentum tech stories come of the stayathome tech stories to the go out in the world story . Kristen you have to be selective. One of the things i want to there is an important ,art of your portfolio there where you want to have the exposure because of these choppy. Arkets that being said, you are going to see some of the very high newsplays in terms of about the abatement of the pandemic, but one of the things that is a little bit misleading as you look at some of those sectors, they are still off onto percent, 30 , 40 . They are just so crushed throughout this past year, so i would be a little cautious and always remove or where we started from as opposed to those daily or weekly gains. Sometimes i think they are a little more obvious. Financials make a lot of sense in terms of being positioned in. 021 many of them tend to be average trading at 90 of book value. That is an area that we like. Real estate is another one. When you look at the performance not justbased, this is about commercial real estate. Within the reits sector, you have aoud computing, you lot of great exposure that has been inadvertently beaten up over the past year. Guy we are going to have to leave it there. Thank you very much, indeed. Coming up, the final day of the new economy for them. We will bring you some great conversations. We will hear from bill gates. This is bloomberg. Alix all of this week, we have been hearing from the Bloomberg New Economy Forum, from World Leaders to heavy hitters and ceos. We will be hearing in just a moment from bill gates. He will be saying that the u. S. Rejoining the who is a positive step for that uniform vaccine certificate. In to ay want to dip panel about saving lives and livelihoods and africa with some heavy hitters from there as well. Of course, the pandemic a very different story in africa than in the developed world, in how they recover and the need for cash and Money Investments is very key for vaccine distribution, as well as the Overall Health of their economy. Lets listen in. It is not only the numbers i am talking about. Still in the hearts and lives and souls of those who are being impacted. Have thehink we will capacity to tell them how to live and we still have to look at means and ways of more than the numbers to heal our society, to rebuild our resilience, to be able to reform the way we are going to pick up our lives again , bringing back a sense of normalcy, but also some kind of equalizing opportunities for everyone, particularly for women and children. Thank you so much for your time and for sharing with us a little bit about what the continent is enduring and how the continent is dealing with this crisis. Thank you for your leadership as well in all of this. Please take care of yourselves. Sending a virtual hug. Thank you. Thank you. A great and personal panel there. If you have done more to support personal and Public Health than the bill and Melinda Gates Foundation Chairman bill gates. Move take on how we can beyond this pandemic to start making plans to prevent a better to start making provide a better response to the next one. We now have two vaccines on the market with 95 effectiveness supposedly. For people around the world, what is a reasonable timetable to expect Going Forward now . When do we expect a reasonable number of people to be covered by this . Bill the mrna vaccines which did such a great job of getting into trials quickly, and now are being approved, they are the hardest to scale up in volume and reducing cost, but because the pfizer antibody levels were about middle of the pack, it means that Johnson Johnson and even astrazeneca, which was slightly below, are very likely to work. Those are vaccines that are low cost, dont have the cold chain requirements, and we have factories that are by far higher alreadyhat in the u. S. Standing by to make novavaxs and Johnson Johnsons. So if we can get those three in addition to pfizer and moderna, then you can get into the billions of doses as you get towards summer 2021, and the supply constraints wont be very bad. So it is very good news that the efficacy for pfizer was so high, and what that means for these ever vaccines. Youve pointed out before that rich countries want to prioritize their own citizens, but theres a lot of people around the world, and i know you personally helped pay for these. Reach out to the poorer parts of the world . Bill normally you would use a. Arket mechanism for Global Health, that is really inappropriate. Of course, the rich countries that help fund the r d, including the u. S. , they will get some prioritization. The only way to square this contradiction is to get the volume up, and that is why the ,ighvolume vaccine industry india makes two dollar vaccines, the western countries make 200. Accines there will be some preference in the rich countries because of these reservations that have taken place, but this novel second sourcing that we funded where they are literally making astrazeneca vaccine right now in higher volume that in any other factory ever will, that can get it so the developing world delays, for five months delays which will reduce the total , will forcetically developing countries to get to the back of the line. John so is it by the beginning of next summer that you are beginning to see the penetration . Bill these factories will send all of their outputs to developing countries, so india domestically, and then africa and low Income Countries. It has never been done that one company invented a vaccine and than other companies manufactured that vaccine. Usually it has to be reinvented to get into another factory. That is what a some novel, and why we went and reserved that spring, back in the because that capacity is so forntic and it can work these constructs. They world did not rehearse for this. If we had rehearsed, the idea for how we stitched together all of the factory capacity would have been talked through, and there would have been a way of doing that, and the u. S. Would have been part of that dialogue. As it was, all of these second source agreements were done by the foundation paying out money and using the relationships and expertise we had with the western companies and the indian vaccine companies. John for the Public Sector, do you think governments could come in and do more on this . You praised the British Government actually on this. Had each government has certain mistakes and some things theyve done well. In the case of the u. S. , the only thing theyve done well is they funded more r d not just for u. S. Based companies, but for companies around the world, including a lot of these european constructs. That was a good thing. That was a favor to the world. The rest of it, the u. S. Is sort of at the back of the pack. The diagnostic work we did, the messaging. Even today, the messaging is reaching a new level of incoherence. John i just looked again on the bloomberg virus tracker. You look at the death for everyone million people, and 750ica is now close to deaths for every million people. One number may be a bit over counted, the other a bit undercounted, but by any measure , one is less than the other. Why has the u. S. Been so bad compared with other people . Bill i dont think comparing china and the u. S. Is that has a moreause china authoritarian control over does, buthan the u. S. If you compare the u. S. To south , the contrast is every bit as dramatic as it is with china. We are facing, which the model predicted, that the fall will be very tough. Some people didnt think the fall would be tough, but as they look at the numbers and saw in places like brazil how the winter affected infection rates, they saw that and so the bad news is the next six months in the Northern Hemisphere will be very tough. Good news is that both the vaccines and the therapeutics, and particular the antibodies, are coming along and will start to bring that number way down. John we must presumably rely on masks and testing especially. Bill thats right. Tests for people, and then if they test positive, you contact tracer, and those people make sure they are not infecting other people. The u. S. Still has a long ways to go on that, although the numbers are so extreme, you do finally more agreement that restaurants, bars, a number of things will have to forgo during this next five months period. I howwere you surprised badly america has done on that . Bill it is mind blowing. We have so many more pcr machines per capita than any other country. We have the cdc that has the deep expertise and has practiced how to communicate appropriately to the public. They made some mistakes early on , then they were completely muzzled. No one even knows the names of the people underneath redfield who would have been the key communicators. We had this socalled task force. It is disappointing. We dont get to go back and change that. But we still have a chance to wear masks. Org, they show that if you have good mask wearing, that you save now over 100,000 deaths in the u. S. Over the next six months. To theust getting back vaccines, do you think this is a disease that can actually be eliminated, or one that ends up being controlled, becomes endemic a bit like the flu . What does that mean in terms of supporting vaccination programs going ahead . Bill that is a super good question, and we dont know enough yet to say can we do the elimination of this. That would be the best because then it just doesnt come back. I think there is a good chance we can do that, but we will have to look at the vaccines, how good they are at blocking transmission. Because this is a super spreader disease, it is likely we can do that. Otherwise we will have to maintain immunity on an indefinite basis, which probably means booster shots, and a little bit if people come into the country, do they have a Digital Certificate that says whether they have been vaccinated or not, which sounds fairly complex, and we will need for a period of time. But if the u. S. Rejoins the wto, this idea of what does the vaccine certificate look like, hopefully that dialogue will begin. Coronavirus was tough, but it is possible you could have much worse viruses. Beyond. The world react . Uld governments should they have an amount of money around each year so that if something worse comes along, we can deal with it . Bill theres investments that are probably tens of billions a year for the rich countries that are both in the r d side to get these platforms so that the vaccine would come much faster, the antibodies would come much faster, and we can do testing not like 1 to 2 per week of a population, but more like 25 per week. For that, we need r d investments. We also need several thousand people who are engaged in working on some kind of chronic infections like malaria, polio, measles, who have the skill sets and are ready to switch over whenever a pandemic starts to emerge. They need to be paired with a very strong surveillance capability, including in asia and in africa. The cost wont be large compared to the cost of the military, but people will expect governments, particularly the rich ones, to step up with those tens of billions of dollars. I wrote an article back in 2015. Im a little smarter now about what those investments look like, but it is largely that plan. John in the way that a company should think about it, in order to incentivize companies to keep on doing this, is that the key bit . I room are you telling me that the problem with vaccines is you give them mainly to people who are well, so there is always this big liability thing coming behind this. But if you look forward to more dangerous things, you almost have a permanent Monitoring Force of companies who in the end have paid for in the same ways you might pay for defense . Bill we ex